Running a DC plan is complicated. Most plan advisors and sponsors rely on their TPAs and record keepers to help them stay up to date and in compliance. But regardless of the quality of their third party vendors, advisors need to know what’s required to keep the plan out of trouble and running smoothly. If things go wrong, playing the blame game is not a good long-term strategy.
Buck Consultants recently published a brief review of suggested best practices for running a single-employer DC plan.
A solid overall annual check should include a review of plan expenses, plan design, participant fees and investments, making sure that the operation of the plan actually complies with the plan documents — including the IPS. Key issues to look out for before the regulators come calling include:
• Timeliness of deposits, which is always cited as a key DOL concern
• Policies and procedures around loans and defaults
• Auto cash-outs of small balances
• Locating lost participants and dealing with their accounts
• Naming beneficiaries, especially in light of the Supreme Court’s Windsor decision on same-gender couples
• Forfeitures and vesting
And though it sounds obvious, make sure that the SPD matches the plan documents.
The plan review may uncover a need to make amendments — Buck even suggests requesting an IRS determination, which can be done every five years.
Sound complicated? The good news is that experienced service providers will do most of the heavy lifting. But plan advisors need to be aware – it’s the nature of the business you’ve chosen.
